EM performs as Brexit fears resurface, but volumes stay light; Bank of China draws orders

By Christine Van Dusen

Atlanta, July 6 – Emerging markets bonds managed to perform on Wednesday following Tuesday’s more wary approach, which stemmed from continuing concerns about Brexit, the Italian banking crisis and upcoming economic data from the United States.

“Going into this morning, U.S. 10-years entered into sub-1.35% territory while the British pound has fallen to a 31-year low versus the U.S. dollar,” a trader said. “EM currencies are unsurprisingly opening weaker as well. [Emerging markets] credit, however, still performs very well in the current environment, with spreads only wider to match the rates move.”

The primary market is expected to remain mostly quiet, a trader said.

“Supply from Turkey [the Middle East and North Africa] for the next couple of months is expected to be close to zero,” he said. “Look to September time for the next wall of Middle East issuance.”

From Latin America, most names held in “pretty well” during the morning, a New York-based trader said, with most account bases resuming their buying and firm bids coming in for high-yield, high-grade and split-rated credits.

Still, volumes and inquiry remained slow.

Some trading activity was seen on Tuesday for Bank of China Ltd.’s new multi-tranche issue of notes due in 2018, 2019 and 2021 and denominated in dollars, euros and renminbi, a market source said.

The new issue of notes from China’s Yunnan Metropolitan Construction Investment Group Co. Ltd. traded near reoffer on Wednesday, a market source said.

© 2015 Prospect News.
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